Africa’s solar boom faces higher costs as China cuts export subsidies
[March 23, 2026] By
ALLAN OLINGO
NAIROBI, Kenya (AP) — China’s decision to end value-added tax rebates on
solar panel exports and phase out incentives for making battery storage
equipment could push up the cost of solar installations in Africa, which
relies heavily on imported Chinese technology.
The changes, expected to take effect April 1 for solar panels and
beginning next year for batteries, may complicate efforts to expand
renewable energy to close vast electricity gaps across Africa, though
experts say the impact likely will be manageable.
“We are likely to see solar panel prices increase in Africa because most
of the inputs come from China,” said Wangari Muchiri, an energy analyst
focused on Africa’s clean energy sector. “Removing the rebate will add
to existing costs, especially when you consider shipping, logistics, and
other import fees.”
Africa already pays significantly more for solar equipment than other
regions because of transport costs, smaller import volumes and tariffs.
China's policy change reflects broader shifts after fierce competition
among Chinese manufacturers pushed solar module prices to as little as
$0.07 per watt in 2025, from $0.25 in 2022. That helped drive global
adoption of solar energy, but left many companies with heavy losses.
Some Chinese companies built VAT rebates into their export pricing,
effectively transferring those subsidies to their overseas buyers. But
Beijing has cut back on those payments as it reins in overcapacity and
shifts toward more advanced technologies.
Rather than a sharp price shock, the loss of such rebates will likely
gradually raise prices, setting a firmer global price floor.
“The changes are significant, but not catastrophic,” said John van
Zuylen, CEO of the Africa Solar Industry Association.
“The entire recent solar boom was built on artificially cheap Chinese
pricing,” van Zuylen said. “That era is now ending.”
“When a structural rebate is removed, exporters typically either absorb
the cost, raise prices, or reduce discounting,” van Zuylen said.
“African countries will likely feel this as a gradual upward shift in
pricing rather than a single dramatic spike.”
Even with modest price increases, solar is expected to remain
competitive across much of the continent since it's the cheapest source
of energy in Africa, Muchiri said.
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An aerial view of a solar power plant in Ouarzazate, central Morocco
on Feb.4, 2016. (AP Photo/Abdeljalil Bounhar, File)
 “Even with higher panel prices, it
will still be significantly cheaper than alternatives like diesel,”
she said.
"It will increase project costs slightly and might delay the project
construction pipeline due to supply chain shortages and contractual
changes, stockpiling rush, congestion in shipment for the countries
heavily reliant on Chinese imports," said Sonia Dunlop, CEO of the
Global Solar Council, an industry association.
Battery storage, critical for providing electricity after sunset,
may face a bigger challenge as incentives are phased out through
2027. Higher costs may affect smaller users the most, van Zuylen
said.
“Batteries matter more than panels for Africa because storage is
what makes solar reliable for off-grid and backup users," he said.
Basil Abia, co-founder of the Nigerian energy research firm Truva
Intelligence, said that “batteries have historically been expensive,
and many solar installations in Africa were built without them.”
“Only recently have we started seeing more systems combining solar
with battery storage," Abia said.
He said that even without rebates, solar modules remain relatively
affordable. Through 2024 and early 2025, module prices fell sharply
from around $0.25 per watt in previous years to as low as $0.07 per
watt.
Demand for solar, which now supplies 3% of power generation in
Africa, is expected to continue growing as storage improves
reliability. Meanwhile, the heavy dependence on Chinese equipment is
drawing attention to limited local manufacturing capacity.
“The VAT removal will slow, but not reverse Africa’s clean energy
transition,” Abia said. “Countries that use this moment to
accelerate local manufacturing will emerge stronger. Those that do
not will remain exposed to Beijing’s next industrial policy
adjustment.”
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